Trump Adviser Pillsbury: 'You Shouldn't Be Thrilled' about U.S./China Trade Talks

Posted on 10/18/2019 6:01 AM

China’s GDP grows at slowest pace in 30 years | USDA's Censky on key ag sector issues

In today's updates:

* Trump trade adviser Pillsbury on U.S./China talks: 'You shouldn't be thrilled'
* Kudlow talks about what is contained in $40 bil. to $50 bil. China ag purchase
* Were corn, biofuel proponents snookered by EPA... and President Trump?
* Hemp regulations to be released soon: USDA Deputy Sec. Censky
* Censky responds to questions re: EPA's controversial RFS announcement
* Censky on disaster aid, MFP 2 payments, USDA crop reports, vaccine bank, staffing
* USDA cattle market probe continues, but no timeline for decisions: Censky
* Key House lawmaker pleased with Mexico's labor steps as USMCA talks continue
* Senate panels examines the status of the Strategic Petroleum Reserve
* FERC winter power assessment issued
* G7 summit to be held at Trump resort amid expected complaints
* Turkey has agreed to a five-day ceasefire in Syria
* Trump to name his replacement for Energy Sec. Rick Perry very shortly
* Mulvaney walks back comments tying Ukraine aid to 2016 probe
* Britain’s Parliament will vote on Brexit deal on Saturday
* UAW/GM: monthlong strike won’t end until rank-and-file workers have a vote
* Sanderson Farms will hold an analyst day event in New Orleans today

Markets: Chinese economic growth missed expectations for the third quarter. It’s the slowest growth rate since 1993 (WSJ says 1992), when China started reporting its GDP by quarters. China’s economy expanded by 6% in the third quarter from a year earlier, vs. the 6.2% pace recorded in Q2 and the consensus forecast for a 6.1% gain. It hit the bottom end of Beijing’s target range for growth this year. There are several factors to blame:

   • The trade war with the U.S., which is still raging despite recent breakthroughs in negotiations between Washington and Beijing
   • Slumps in the country’s huge automotive and real estate sectors
   • A swine fever epidemic that has decimated its pig population

   Economists are pessimistic about the immediate outlook for China, though retail sales were up 7.8% from a year ago and industrial output rose 5.8% in the same period.

   China’s gloomy GDP numbers follow a warning from the IMF this week that global growth will fall to its lowest level since the international financial crisis. The world economy was set to grow 3% in 2019, 0.3 percentage point below its equivalent forecast six months ago, the IMF said.

The U.S. is slapping tariffs on $7.5 billion worth of European goods today. Aircraft produced in the European Union will be slapped with 10% tariffs, while a group of consumer products that includes wine, whiskey and cheese will be slapped with 25% tariffs. Earlier this week, the World Trade Organization cleared Washington to take action after concluding that Airbus received billions of dollars in illegal subsidies over the years.

 

U.S./China trade policy update:

  • Trump trade adviser on trade talks: "You shouldn't be thrilled," Michael Pillsbury, a senior fellow at the Hudson Institute and outside adviser to Trump, said this week on Fox Business. "The tactic here is to postpone the harder issues until Phase 2, but Phase 1 isn't even locked up yet and it could explode in our faces."
  • Kudlow suggests the $40 billion to $50 billion ag purchase commitment is not just farm product buys. National Economic Council Director Larry Kudlow noted that while China has promised to purchase a lot more U.S. soybeans, sorghum, wheat and other commodities, much of the increase in trade is predicted to take place as a result of China agreeing to tear down non-tariff trade barriers, Kudlow said in a CNBC interview (link).
  • California winemakers have seen their market share in China shrivel, reports the South China Morning Post (link). Sales to Beijing are set to hit $30 million this year, down from more than $78 million in 2017.
  • Samsung has moved its smartphone manufacturing out of China. At the end of last month, the South Korean electronics group closed its last remaining Chinese smartphone plant in Huizhou. As recently as two years ago, the Huizhou plant’s 6,000 workers were still making 63 million phones, or 17% of Samsung’s global production, according to analysts.
  • China wanted NBA executive fired over Hong Kong tweet. The Chinese government asked the NBA to fire the Houston Rockets executive who tweeted in support of Hong Kong protesters, the league’s commissioner, Adam Silver said yesterday. “We said there’s no chance that’s happening,” Silver said. “There’s no chance we’ll even discipline him.”

Corn, biofuel proponents snookered by EPA? Ever since EPA unveiled its complex and surprising announcement regarding its package of reforms for the Renewable Fuel Standard (RFS), biofuel and corn industry lobbyists took to their usual stance: being upset. But they may have good cause this time, sources acknowledge. Reason: EPA's attempt at a “win-win” approach between biofuel and crude oil sectors was not the balanced approach President Trump signaled it would be in his prior comments. Link to details on EPA announcement.

The main takeaways are: EPA is not proposing to change the RFS gallon levels, though they may in the final rule; they are using the percentage standards as the way to address the small refiner exemptions (SREs); they have been all over the road on SREs. It is not what U.S. agriculture was hoping for and also means EPA will not meet the Nov. 30 announcement date for finalizing RFS volume requirements.

One industry analyst said: “I think the anger is that everyone assumed that the EPA would project SREs by taking the actual average of the past three years, but instead they used a method to weight by DOE scores. The DOE has steadfastly indicated these are NOT recommendations in the past and EPA has all the discretion (they do). Cynically, this method allows EPA a wider latitude to cut the RVO as needed. While they never say it, they are targeting RIN price control.”

Another industry analyst responded: “What EPA said is that it is difficult to project with certainty how many SREs will be granted when it sets the required volume obligations in November given that the compliance for the prior year isn’t until March of the subsequent year. Therefore, we’re looking for a midway/halfway point. Therefore in developing our formula we’re going to utilize the partial exemption recommendations made by DOE in the past and make projections based on a hypothetical that IF EPA had used partial exemptions. The bullshit factor is that heretofore EPA has said it can’t possibly grant partial exemptions but now conveniently enough they’re using partial exemptions to lower the projected exemptions it may grant. That said, EPA will say a court has told us four times we have to grant SREs pursuant to the statute and nowhere does it say we have to reallocate so therefore this is an appropriate compromise.”

Bottom line: Whatever the eventual announcement expected to come from USDA about promoting more E15, it will not be nearly enough to make the renewable folks happy. USDA Sec. Sonny Perdue and Sen. Chuck Grassley (R-Iowa) did not win on this battle with the refining industry. Nor did biofuel proponents. If EPA does not alter its current stance when the final announcement comes after reading public comments, President Trump could feel the pain in the critical re-election state of Iowa, some say.

Highlights of USDA Secretary Steve Censky before Senate Ag Committee:

  • Conservation program implementation. Several members of the panel expressed interest in implementation of new conservation provisions of the 2018 Farm Bill, particularly the Conservation Reserve Program (CRP). Concern over ensuring robust CRP enrollments was expressed by Sen. John Thune (R-S.D.), especially given the new farm bill boosted the program enrollment cap to 27 million acres from the current 24-million-acre level. “My understanding is that this year so far, we've only enrolled about 700,000 new acres and we are already 1.6 million acres below the 24 million cap,” he remarked. While continuous signup for CRP is already open, Cenksy said USDA remains on track to open general CRP signup this December, which he said is likely to be “the largest signup ever.” Early next year, the department plans to open CRP grassland signup and then the CRP Soil Health and Income Protection (SHIP) pilot program “in the Spring,” he added. Additionally, USDA continues to move ahead with implementing the Conservation Reserve Enhancement Program (CREP) for 2019, Cenksy said. The department is holding signup for provisions that were unchanged under the new farm bill and is now “in the process right now of updating our regulations for some of the new provisions” with an eye on publishing those rules “sometime yet this fall.”
     
  • Hemp regulations expected soon. The interim final rule is currently undergoing a review by several agencies and is on track to be finalized in the next couple of weeks. We are “nearing just about the end of the process,” said Censky. There is robust interest from farmers about the 2018 Farm Bill’s legalization of industrial hemp, noted Sen. Joni Ernst (R-Iowa), who asked Censky when USDA’s interim rule for the national hemp program will be released for public comment. In his opening remarks, Cenksy said USDA’s Agricultural Marketing Service (AMS) has been “working aggressively” to ensure regulations are ready for the 2020 growing season. “We would expect to be issuing the interim final rule here within the next couple of weeks,” Cenksy said in response to Ernst’s follow up. The rule has “been in the interagency clearance process now for over 90 days” at the Office of Management and Budget (OMB), said Cenksy, adding that he believes “we're nearing just about at the end of that process.” The rule is still listed as being under review at OMB.
     
  • Recent RFS announcement from the EPA. Ensuring that the Environmental Protection Agency (EPA) follows through on an agreement to protect the Renewable Fuel Standard’s (RFS) 15-billion-gallon conventional biofuel volume mandate — even as it continues to issue small refiner exemptions (SREs) —was a major concern voiced by lawmakers. Echoing sentiments expressed across the biofuels sector, Sen. Tina Smith (D-Minn.) suggested the details offered by EPA this week “seem like a bait and switch” compared with the deal announced at the White House on Oct. 4. A major concern is the methodology EPA wants to use to estimate and account for expected SREs. The agency proposed using Department of Energy (DOE) projected exempted volumes rather than the volumes actually exempted via waivers when adjusting subsequent RFS levels. Biofuel proponents argue that using such a methodology will result in an under-accounting of actual waived volumes.

    President Donald Trump “is insistent” that regardless of the methodology used by EPA that “we do reach 15 billion gallons,” Censky stressed, promising to work closely with the committee on the topic as EPA’s proposal moves forward.

    Besides accounting for SREs, Ernst asked Censky about other biofuel-boosting moves pledged by the Trump administration, including infrastructure projects meant to build demand for higher biofuel blends. Ernst called the plans to expand biofuel infrastructure for things like E15 “key to the industry’s future.” USDA is currently talking to retailers and those in the biofuels sector “about what is needed both to incentivize the higher blends of ethanol as well as what infrastructure might be needed” to facilitate the shift towards higher ethanol blends, Censky responded. USDA plans to hold roundtables “in the very near future” with biofuel stakeholders, “and then look toward to trying to implement a [infrastructure] program and have it up and running by early next year,” Censky added.

     
  • Disaster aid. Wildfire and Hurricane Indemnity Program Plus (WHIP+) disaster aid also drew some questions from lawmakers. Sen. John Hoeven (R-N.D.) asked how USDA was preparing for the potential of additional disaster declarations stemming from recent early winter weather in the Upper Midwest. “I know that our Farm Service Agency in North Dakota is working right now assessing the damage that's been caused by this most recent heavy snowstorm that hit and really has impacted producers in your state,” Censky responded. Cenksy also addressed the issue of farmers who have experienced crop damage but do not live in a county with an active disaster declaration. Even though WHIP+ typically requires producers to be in a county that has been declared a disaster area, any county where at least 30% of any given crop is lost “qualifies that county as being eligible for a declaration from us that makes those producers in that county eligible” for the aid program, Censky noted. If a producer is not in a county with an active disaster declaration but live in one adjacent, they can still apply for aid, Cenksy emphasized. Farm Service Agency (FSA) county committees will weigh those applications and decide whether the individual farmer is eligible for assistance, he observed.
     
  • MFP 2 payments. Censky said $5.5 billion in Market Facilitation Program (MFP) 2 payments have been made to farmers since the Farm Service Agency began issuing checks the week of Aug. 19. USDA is deciding whether to go through with the next installment of trade relief payments to farmers for 2019 production. Censky said the department is aiming to make a final call “in the very near future... I think we’re very much aware that producers have been impacted by the trade retaliation, they’ve been impacted by the weather, low incomes,” Censky said. The department is divvying up the $14.5 billion it allocated for direct payments in three installments: The first round became available over the summer, while the second and third tranches will be available in November and January, if warranted. Producers have until Dec. 6 to sign up for MFP.

    Editor's note: Pro Farmer sources from the White House signal high odds the second MFP 2 installment (November) and third tranche (January) will be made due largely to ongoing talks with China and the fact that even if there is an agreement, any such accord will take time to implement.

    Meanwhile, Senate Ag ranking member Debbie Stabenow (D-Mich.) told Censky the trade mitigation program is upsetting the delicate balance lawmakers attempted to strike in the 2018 Farm Bill relative to spreading federal dollars evenly across the ag sector. “I feel like the Market Facilitation Program is throwing that all away,” Stabenow said. “I don’t see how the payments are lining up with the damage: 95% of the counties with the top rate are in the South; 77% of the counties that have minimum payments of $15 are in the North and West.”

     
  • Vaccine bank timeline. Establishment of the new foot-and-mouth disease (FMD) vaccine bank created via the 2018 Farm Bill was also a focal point. Panel Chair Pat Roberts (R-Kan.) and several others sought information on the timeline for getting the new bank up and running. USDA’s Animal and Plant Health Inspection Service (APHIS) put out a “sources sought notice” to gather information from potential suppliers of vaccine for the bank, with responses due Oct. 10, Censky remarked. “We're in the process of analyzing that and will be putting together a plan on what types of procurements we want to do” for the bank, including looking at what FMD serotypes other vaccine banks have procured,” he said.

    As for when APHIS will begin purchasing vaccine, Censky said he expects a request for proposals (RFP) from suppliers will be issued “towards the end of this year or the beginning of next [year].” That aligns with the timeline predicted by industry stakeholders like the National Pork Producers Council (NPPC).

    Besides the vaccine bank, Censky also noted other animal disease preparedness provisions of the farm bill, including measures to bolster laboratory networks. “We are going to be making available up to $10 million this year” for those other preparedness activities, Cenksy noted.

     
  • Cattle market investigation. USDA’s investigation into price movements in cattle markets following a fire at Tyson Foods’ Holcomb, Kansas, meat plant also surfaced several times during the hearing. Thune asked where the investigation now stands, and Censky replied that the probe is “moving forward” but that he does not have a time frame for when it will be completed. Investigators are “taking a look at whether there was any kind of price manipulation, and any unfair trade practices that took place at that time,” Censky observed.
     
  • Grassley raises crop reporting concerns. Alleged discrepancies seen this year in USDA’s crop reports were raised by Sen. Chuck Grassley (R-Iowa), who said those concerns have sewn “a lot of distrust among farmers” who felt some of the numbers reported were “very unrealistic.” USDA understands its reports are “relied on not only by producers, but the markets and the trade. And they really set the standard of how other private forecasts are judged,” Censky acknowledged. “We have a long history of making sure we're trying to make them just as accurate as possible.” He said discrepancies seen this year were largely due to unforeseen weather conditions. To avoid similar issues down the road, Censky said USDA will be implementing a pilot program involving additional satellite data so that USDA can adjust its forecasts if, for example, substantial rain falls after crop survey data is gathered. With additional data sources, the department “will be able to utilize — rather than just the survey information — satellite information and other information to give the best forecast,” he observed.
     
  • FSA, NRCS resources. Roberts asked what steps USDA was taking to ensure “producers receive consistent information and service” across the thousands of local FSA and National Resources Conservation Service (NRCS) offices given the changes brought by the latest farm bill and “limited resources” available to the department. “We have done a lot of training to make sure that our staff and our offices are informed and know about the provisions and know how to implement the provisions,” Censky responded, noting USDA has already held “three major national trainings” with a fourth specific to CRP and other conservation programs coming up soon.

    Implementation and signup for the new Dairy Margin Coverage (DMC) program is “symbolic” of USDA’s approach to training and outreach, Censky remarked. “It was a lot easier for our staff and for the producers to be able to sign up” for the new program thanks to careful planning and roll out, he said.

    With the new farm bill and the associated workload at local FSA and NRCS related to implementation of new programs and changes to existing ones, many lawmakers pressed Censky about whether USDA had adequate staffing for those efforts. “We have a very aggressive hiring plan that's in place” to ensure FSA offices are properly staffed, Censky observed, calling the goal “a high priority for us.” He acknowledged some difficulties stem from “bottlenecks… in the Human Resources (HR) area,” but said more HR staff have been brought on to address the issue. Looking forward, USDA has requested “direct hire authority” from the Office of Personnel Management (OPM) so that USDA can bypass requirements like advertising on the national USAJobs.gov website to hire staff for local offices, Censky noted.

Neal pleased with Mexico's labor steps as USMCA talks continue. Mexican President Andrés Manuel López Obrador sent a letter (link) to U.S. House Ways and Means Chairman Richard Neal (D-Mass.) outlining steps Mexico is taking to strengthen labor standards. “I’m very pleased with Mexico’s demonstration of good faith,” Neal, who is among lawmakers working on the pending U.S.-Mexico-Canada trade accord, said in a statement. “Given the high labor and enforcement standards Democrats require from the new NAFTA agreement, I am eager to receive further details from USTR regarding the Trump administration’s preparation to meet our priorities,” Neal concluded. Speaking after a 90-minute meeting with Lighthizer, Neal said Democrats are still looking for assurances on enforcement. Asked whether the two sides might be able to reach a handshake deal by Thanksgiving, Neal replied: "I would like to think that, but I think that even based on what we discussed here today ... that there's still a ways to go."

Mexican Undersecretary for North America Jesús Seade met with aides to House Speaker Nancy Pelosi (D-Calif.) and Neal, promising that Mexico is following through on its USMCA promises to improve labor conditions. Jesús Seade made clear that any changes Democrats and Lighthizer agree to will require approval from Mexico. He said he expects Lighthizer will come to him with a list of changes that Democrats accepted — and then it’ll be up to Mexico to assess what works for them. “It has become obvious that there are things that will need to be adjusted,” he said. “When Lighthizer presents [the changes] to me, perhaps it will be a negotiation of 10 minutes … or perhaps it will be a bit more complicated.”

Negotiations between House Democrats and U.S. Trade Representative Bob Lighthizer over USMCA continued this week, with sessions on Wednesday and Thursday and another meeting slated for today.

Examining the status of the Strategic Petroleum Reserve (SPR). The U.S. barely escaped disaster from last month’s attack on Saudi Arabia’s oil facilities and won’t be so lucky next time unless it invests in the SPR. Senators, Trump administration officials, and oil analysts delivered that warning at a hearing Thursday, criticizing Congress’ habit of raiding from the U.S.’ emergency oil stockpile to fill unrelated budget gaps. Congress has mandated just under a third of the SPR to be sold over the next decade, with over 200 million barrels of oil on the chopping block.

The fact we did not need to tap the SPR after the Saudi outage does not in any way discount the value of having that as an option,” said Energy and Natural Resources chairwoman Sen. Lisa Murkowski (R-Alaska). “We had that in reserve and that was critical. It could have been much worse. It could very well have been economically cataclysmic.”

Oil prices have calmed after the attack caused the largest single day price hike in decades, and that likely won’t change even with continued hostility in the Middle East, because of sagging demand for oil from the slowing economy.

Slowing economic growth continues to put downward pressure on oil prices which will outweigh concerns about supply security,” said Linda Capuano, administrator of the Energy Information Administration.

But, recovery won’t be so easy if another attack occurred, enhancing the value of the SPR, said Jason Bordoff, director of Columbia University’s Center on Global Energy Policy. “Regional tensions continue to flair and there will be a thinner buffer of spare capacity next time,” he said.

Steve Winberg, an Energy Department assistant secretary, said the Trump administration does not expect to release oil from the SPR in the near future. But he argued that a strong SPR is a “disincentive to any actor looking to disrupt the world’s supply of crude oil and is a moderating factor to keep prices from rising higher than they would otherwise.”

Jason Bordoff, director of Columbia University’s Center on Global Energy Policy (CGEP), discussed the status of the SPR and related energy security issues. In his testimony, he made the following points:

  • “First, the recent attack on key Saudi Arabian oil facilities serves as a reminder of America’s vulnerability to global supply disruptions, notwithstanding the dramatic decline in U.S. net oil import dependence. While fortunate to avoid a sharp price spike as a result of those attacks, significant risks to oil supply persist around the world.
  • “Second, although the U.S. is on the cusp of becoming a net oil exporter—a stunning turnaround from our import dependence just a decade ago—that does not mean America is energy independent. Oil is priced in a global market, so prices in the United States move with the world price whether we import or not.
  • “Third, despite the shale boom and declining import dependence, the Strategic Petroleum Reserve (SPR) remains a critical national security asset. While the shale revolution does not insulate U.S. drivers from global supply shocks, it does offer an important buffer.
  • “Fourth, while the U.S. must act to reduce oil use more quickly to address the urgent threat of climate change, the U.S. will use oil for a long time; indeed, a clean energy transition period that is messy, unpredictable, and volatile increases, rather than decreases, the need for the SPR as a tool of transition.
  • “Fifth, the SPR only serves as a short-term, temporary fix to price spikes. In parallel, it is also necessary to encourage structural reduction in oil use. The best way to protect American consumers from the impact of inevitable global oil price spikes is to reduce how much oil we use in the first place. Higher fuel economy standards are one smart and effective tool.
  • “Sixth, SPR modernization is necessary to ensure its continued effectiveness, and more rapid progress needs to be made to achieve this.
  • “Finally, strategic review of the SPR remains needed and should extend beyond just the optimal size of the SPR to include its purpose, composition, and use. In some sense, the SPR is either way too big or way too small, depending on what risks it is intended to guard against. Rather than endeavor to identify its optimal size through cost-benefit analysis, the SPR should be viewed as a tool of risk mitigation and insurance.”

Other items of note:

  • G7 summit to be held at Trump resort near Miami. The White House said the U.S. will host the 2020 Group of Seven summit at President Trump’s luxury golf resort near Miami, bucking quick criticism that Trump is looking to personally profit from the presidency. “It’s almost like they built this facility to host this type of event,” the acting White House chief of staff said, dismissing questions over the propriety of the president’s picking his own hotel.

  • Turkey has agreed to a five-day ceasefire in Syria following the meeting between Turkish President Recep Tayyip Erdogan and U.S. Vice-President Mike Pence, with Turkey to halt an offensive in northern Syria temporarily. President Donald Trump said it was “great news” and that “millions of lives will be saved.” In return, Trump will not impose further sanctions on Turkey. But fighting flared in the border region. Meanwhile, The Times of London reported that Turkey could have used banned white phosphorus against Kurdish civilians.

  • President Trump says he will name his replacement for Energy Sec. Rick Perry very shortly. Trump, speaking in Texas at a tour of a Louis Vuitton factory, says his pick for Perry’s replacement will be a man and said Perry will be stepping down by the end of the year. Perry has been subpoenaed by the House presidential impeachment inquiry, with questions asked about his role in pressuring Ukraine’s president to investigate a Democratic rival.

  • Mulvaney says, then denies, Trump held back Ukraine aid as quid pro quo. Conflicting comments by the acting White House chief of staff threw Washington into turmoil. Link to NYT item. Mulvaney later said his comments had been misconstrued.

  • Brexit update. Boris Johnson, Britain’s prime minister, reached a new Brexit deal with the European Union. Jean-Claude Juncker, the European Commission president, called the agreement “fair and balanced.” Britain’s Parliament will vote on the deal on Saturday, but approval is unlikely without the support of the Northern Irish Democratic Unionist Party. The DUP opposes the plan, which would in effect create a customs border in the Irish Sea between Northern Ireland and the rest of the United Kingdom, in order to avoid a hard border in Ireland.

  • UAW representatives voted to approve a tentative agreement with General Motors yesterday, but the monthlong strike won’t end until rank-and-file workers have a vote. The four-year deal includes wage increases and a pathway to full-time employment for temporary workers. It also eliminates a system in which workers receive different pay for equivalent jobs, based on when they were hired. But the deal will not address a previous sticking point: reopening plants and bringing jobs back to the U.S. from Mexico.

Markets. The Dow on Thursday was up 23.90 points, 0.09%, at 27,025.88. The Nasdaq moved up 32.67 points, 0.40%, at 8,156.85. The S&P 500 rose 8.26 points, 0.28%, at 2,997.95.

Sanderson Farms will hold an analyst day event in New Orleans today. Heading into the presentation by Sanderson execs, there has been ample discussion over the ongoing impact of African swine fever. The last read from Sanderson Farms was that it expected a shortage of pork in China to raise prices globally for chicken and beef. The company is also expected to provide an update on current marketing initiatives, the export markets and the domestic retail grocery/food service market.

FERC winter power assessment issued. Staff for the Federal Energy Regulatory Commission (FERC) on Thursday presented their 2019-2020 Winter Energy Market Assessment at the regulator’s monthly meeting, concluding there is still a role for coal-fired and oil-fired power generation. The update indicated with chances for winter to be warmer than normal running higher than normal, the natural gas storage levels going into winter are average. They also noted that natural gas futures prices are lower compared with last winter and winter reserve margins are above reference levels in all areas. Plus, they noted that the additions of pipelines in Permian and Marcellus basins have improved the fuel supply chains. With some regions more dependent on natural gas than others, the report said that any pipeline outages have the potential to cause price volatility. As for coal- and oil-fired power generation, the report said those will still play an “important” role in ensuring reliability in supply, especially in the Northeast U.S. They based that view on the fact that winter demand for natural gas can exceed the capacity available in current pipelines.


 

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